Number of Americans who #RenounceCitizenship Surged in 2nd Quarter http://t.co/I84MIgTFbN – Will encourage #americansabroad to renounce!
— U.S. Citizen Abroad (@USCitizenAbroad) August 10, 2013
This is a rather disappointing article from an author who has written on this issue before. Why disappointing? The general tone seems to equate Americans Abroad with tax evaders and terrorists (whatever those are). That said, it’s one more article reporting the increasing numbers renouncing U.S. citizenship.
For example:
The U.S. launched the tax crackdown after the terrorist attacks of Sept. 11, 2001, and ratcheted up its efforts after 2009, amid evidence that UBS AG UBSN.VX 0.00% and other foreign institutions helped U.S. taxpayers hide assets.
Some taxpayers have applied for IRS limited-amnesty programs, in which they pay stiff penalties for past noncompliance but avoid prosecution.
Tax lawyers say the crackdown has ensnared smaller violators who weren’t intentionally evading U.S. taxes.
In addition, a law enacted in 2010, the Foreign Account Tax Compliance Act, or Fatca, requires foreign financial institutions to certify they aren’t hiding U.S. taxpayer assets, which lawyers say is leading some to reject U.S. customers.
Taxpayer penalties for failing to report assets can be severe, including up to 50% of an account balance for each year.
Although there is some suggestion that renunciations are caused by the time, expense and fear of compliance burdens, these suggestions are “too little and too late” in the article (at least that’s my interpretation). Therefore, I would suggest getting over to the comment section and offer them an “IBS Educational Seminar” on the impossibility of U.S. citizenship abroad.
Interestingly there was one rather good comment from some guy named Roger Conklin (amazing how much he seems to know). He argues, rather convincingly that a move to RBT/Territorial taxation would be good for the U.S. economy.
The US is one of the two nations of the world that belong to that very exclusive club of countries that subjects its citizens to citizenship-based taxation. The only other member nation is Eritrea, a” thriving” democracy in Africa. These two nations, in addiction to subjecting all of their residents to taxation on their world-wide income, also subject their citizens to homeland taxation if they live and work abroad, as if they never left home. Both US and Eritrean citizens living abroad are simultaneously subject to the tax laws of both their country of citizenship as well as the country where they reside. Both exert their “right” to assess and collect taxes from their citizens residing within the sovereign borders of every other nation. All other nations tax the world-wide income only of their residents, regardless of citizenship.
The UN Security Council condemned Eritrea by Resolution 2023 (2011) in December 2011 on the basis that its citizenship-based taxation violates the UN Universal Human Rights Declaration by depriving its citizens of the right to freely leave and return to any country, including their to own. They can leave, but they must continue to pay Eritrean tax no matter where they go. Heaven help them if they return home for a visit not being current in their tax obligations. Susan Rice, then US Ambassador to the UN, led the charge in securing this condemnation, thus asserting the right US to be the only nation permitted to violate the territorial taxation sovereignty of other nations with impunity.FATCA obligates all foreign banks, at their own expense, to violate the privacy laws of their countries by providing fully-detailed annual reports to the IRS on all of their accounts with any US-person ownership, including jointly owned by their foreign spouses and relatives, in English with foreign currency values converted to equivalent dollars. Prominent US citizens living abroad, having been born in the US, include the King of Thailand, the mayor of London, one dual-citizen Canadian provincial premier and 6 members of the Canadian parliament as well as the 2 adult children of recently-deposed Egyptian president Morsi, as well as all children born abroad to one US parent who speak no-English, have never been in the US or held a US passport who likely do not even know they hold US citizenship. All are subject to US taxation and FATCA. There are 16 IRS instructions for US citizens abroad with 7,332 pages, plus 667 pages of tax forms. The FATCA instruction for foreign banks has 544 pages. The middle-class US citizen abroad can expect to pay the equivalent of one month’s wages for competent professional assistance in filing his US tax return, even though foreign tax credits in very high tax countries may totally offset his US tax obligation. Citizenship based taxation is not a revenue generator for the US Treasury, but a punishment for Americans residing outside of the US.
It has become virtually impossible for the US citizen to survive living abroad, leaving them with the choice of citizenship renunciation, or abandoning their foreign spouse and family, shutting down their small business, resigning their job and relocating to the US to join the ranks of the unemployed. How this can possibly be in the best interests of the US defies explanation. No other nation punishes its citizens by criminalizing their living and working in another country.
Roger, it’s not “virtually impossible”. It’s actually impossible.
On a brighter note, the authors clearly believe that Canada is a country that is foreign to the U.S. This appears to contradict recent assumptions by the NSA which consider Canada part of the Homeland. The author’s note that compliance costs may be a factor in at least on Canadian renouncing U.S. citizenship.
The cost of complying with various rules and regulations can be steep even for people with small tax bills.
Carol Tapanila, who moved to Canada more than 40 years ago and is now retired, renounced her citizenship in November and appeared on the current list. She says her U.S. taxes amounted to about $250 last year and she didn’t take the step to avoid paying them.
Legal and accounting fees and other costs of making sure she was in compliance in recent years have added up to nearly $40,000, says Ms. Tapanila. “It is nothing but stress.”
And finally, we have the usual comments from our “friends” the cross-border professionals. Of particular interest is:
The U.S. is rare in that all income earned by citizens and permanent residents, even those living abroad, can be subject to U.S. tax, according to Bryan Skarlatos, a New York lawyer. The U.S. also confers citizenship on people who are born on American soil.
Note: the link was added by me and is NOT part of the article.
And an interesting acknowledgement from a former IRS prosecutor (could this be somebody worth reaching out to?):
The web of rules is “overly burdensome,” said Jeffrey Neiman, a former federal prosecutor who led the 2009 UBS case, which resulted in the bank’s agreeing to a $780 million settlement. He now is a lawyer in private practice in Fort Lauderdale, Fla. “You basically find yourself in this continuous nightmare.”
Note: the link was added by me and is NOT part of the article.
Your mission, if you choose to accept it, is to continue to educate these Homelanders, journalists, and U.S. based tax professionals!
@USCitizenAbroad
Here is Jeffery Neiman’s web site.
http://www.jneimanlaw.com/blog/
I have had some exchanges via email a year ago or so, and also on Jack’s Blog where he has guest posted.
Opting Out Considerations – A Jeff Neiman Guest Blog (9/10/11)
@USCitzensabroad.
I guess I don’t have the same disappointment that you do. It is more nuanced story then many you read, and I noted this (along with other tidbits) that I have NOT seen in other stories.
BTW, I accepted the mission and added a comment to the 207 that were already there. It is on page 7, I think it is… There really were too many comments to bother, but what the heck.
Thought I would add a few other links to stories on the renunciations
Americans Giving Up Passports Jump Sixfold as Tougher Rules Loom – Businessweek (this one is hot on Twitter right now as the bitly linked is being accessed a lot)
Americans Renouncing Citizenship Surge 66%
@Just Me
Yes, I have seen far worse. Your focus on:
“Tax lawyers say the crackdown has ensnared smaller violators who weren’t intentionally evading U.S. taxes.”
is interesting. I thought about that, but decided it was still focusing on “evading taxes” The word “evading” is (in the context of tax) a rather negative term.
But, yes, I have seen worse.
Re: The comments to the article.
I am thinking of taking David L.’s comments (the tax lawyer) and making a post out of them. They are well reasoned.
The Bloomberg story is also syndicated onto Yahoo. There are thousands of comments but unfortunately they immediately misunderstand the issue. They think the story is about homelanders, usually rich, escaping the USA in search of lower tax rates. The comments then degenerate into the usual name calling. It’s too bad these reporters don’t make it clear that most renouncers have lived outside the USA for many years.
The comments on the WSJ piece are better but it’s a rare thing to see any rational debate in the comments. Perhaps that’s why I rarely read them except for articles on this issue.
It seems that these reporters are not only contacting those on the Federal Register, but also sifting through the comments to their article. One wants me to talk to me next week, anyone else care to mention whether they’ve been contacted? I’m terrified that they’ll quote me in a bad context, although these two appear to be pretty objective.
The one comment that seems to be missing is “Why the hell should we pay for YOU when we don’t even use the services that we are ‘expected’ to pay for?” All I seem to see our patriotic troglodytes yelling “If you don’t like it…don’t let the door hit you in the ass”. The general atmosphere I see in the American patriot comments is an atmosphere of “entitlement”. Since you were born in the best country in the world you should pay for it and help everyone else out. Not bloody likely in my books. The homelanders can suffer.
@the Animal
Knowing that CBT is unique to them among developed nations only just reinforces their feelings of exceptionalism. When you feel yours is the best country in the world, you not only stop trying, but it’s nearly impossible to accept that your country is one of two of the world’s worst countries in their treatment of their citizens living abroad. America’s position of #1 is becoming more self-ordained than earned among too many.
That businessweek article comments section is typical of what I see of many American web discussions. It has disintegrated into the worst of the worst. One can see racism, a total lack of education, a complete ignorance of the rest of the world and who its citizens are, and a back and forth school yard bully mentality. Reading such as that makes renouncing so much easier. They are ugly, crude, uneducated and totally without any empathy except for themselves. I’ve very nearly described a type of pathological narcissism. It’s just pathetic.
WSJ is better at least in part. Wow, these people living in the U.S. are utterly brainwashed by the idea of CBT being “right” They scare me.
… and it isn’t only CBT on which most Americans are brainwashed. Really ironic, when you consider the stereotype they all had during the Cold War about people behind the Iron Curtain. Goebbels may have invented the phrase “The Big Lie” (which if repeated often enough, lots of people will believe), but it existed in the US before him and has been honed to perfection down there since. What scares me is how clueless they are about the differences in perspectives and values beyond their borders, how clueless they are about how clueless they are, and how many of them don’t care if you try to point this out to them. It’s like trying to have a conversation with a brick wall. How do non-American diplomats cope with having meetings with their US counterparts?
@schubert, we have had Chinese students living with us who were friends of my sons. At any rate we’ve got into discussions about their ideas, politics and the like. They “know” some things. Such as they “know” something happened in Beijing in the 80’s that wasn’t good. They think maybe the government wasn’t right and made some “mistakes” but, that they government HAD to “regain order” BUT the upshot of these conversations was this: “In Canada and the U.S. you think about such things, we just don’t think about it and go on with our lives.” So they have been trained to “just not think about it” and if something “bad” happens to them then it’s all hush/hush. They do discuss issues inside their homes but, never outside of it and never with anyone other than family if they know what’s good for them.
Now to Americans…they are EXACTLY like these Chinese students I talked to daily. They don’t know they are that way! They think they are informed and free! At least the Chinese know they have been kept in the dark and have a sense they have been taught to “Just not think about it” People in the U.S. ONLY parrot what they have been taught and what is in their press on both sides of the fence with nary a thought to the idea that they might be wrong or ill informed. “The Big Lie” as you say goes deeper than I ever imagined. It reminds me of “The Great Compromise” written as a protest song about the Vietnam war by John Prine. In liner notes about the song he said “I really loved America, I just don’t know how to get there anymore.”
“I used to sleep at the foot of old glory and awaken at dawn’s early light.”
“But much to my surprise, when I opened my eyes”
“I was a victim of the Great Compromise”
I just went over and read some businessweek comments. I usually don’t like to comment if I haven’t read all of the preceding ones, but I couldn’t get very far without getting a headache.
@bubblebustin, I know it’s just out of control over there. Everything is a reason to talk about “tyranny” and such. They are WAY off topic most of the time.
@AtticusinCanada
I wonder how many would say the things they say there to someone’s face. Maybe it comes from living in a country with one gun per capita, realizing the internet is probably the only place where you can say what you wish without the risk of getting your head blown off.
If you send a G639 or other freedom of information act request does your name get tagged so it goes to IRS and other organizations?
@AtticusinCanada
Regarding ur: “In Canada and the U.S. you think about such things, we just don’t think about it and go on with our lives.” So they have been trained to “just not think about it” and if something “bad” happens to them then it’s all hush/hush. ”
I guess the Chinese youth are just like the Mormons! They have learned to “Turn it off” 🙂
It is very very disappointing and frustrating to read homelanders’ comments who clearly have no clue. Why is it OK for a US company to hold cash earned offshore and not have to pay US taxes, when a US Person living overseas has to pay the US for services never provided on money earned overseas that has no relationship to the US? What is fair about a system that requires a US Citizen to pay ‘his/her fair share’ for US Citizenship when that ‘fair share’ varies by orders of magnitude depending on where that US Citizen lives and how much he/she makes? Citizen based taxation is just predatory and persecutes otherwise law abiding citizens.
Speaking of the Yahoo News coverage, here is the link…
http://finance.yahoo.com/news/americans-giving-passports-jump-sixfold-105958873.html
Wow! 7,656 comments, so don’t think I will bother with this one…
@just me
Wow, I’ll I might read are the comments, never mind the responses to each comment! if I can sort through that then I should be working for the NSA.
@JustMe, perfect pick! That was a hilarious play btw and yes, it seems they are exactly like that.
@atticusinCanada
It is one of my favorite songs. It resonated with me as soon as I heard it, as it was the method I used to deal with conundrums I didn’t understand while being raised in a fundamentalist family with a Dad as a preacher! Had to learn to “Turn it off” when it came to the tough issues that made no sense!
More Americans Going Galt
and then a reminder of the hypocrisy on Tax havens…. If you haven’t seen this pre FATCA video, it contains the two most dishonest claims about tax haven crackdowns. Good reference to have.
@The_Animal
@bubblebustin
@AtticusinCanada
@Aww Hell, everyone! ;^)
Yes, I believe it was indeed that Businessweek article (….jump sixfold as tougher rules loom….) that I was commenting on at the forums there yesterday, and I had posted my disgust over the whole matter here on the topic of “Sarah Stillman, “The Use and Abuse of Civil Forfeiture”, New Yorker 13 Aug 2013” where an actual intellectual discussion could be found. (as I certainly didn’t find it over there)
I agree 100% with The_Animal that the homelanders there have a pervasive sense of entitlement. I would say ‘arrogant entitlement’ myself.
I also agree 100% with bubblebustin on his entire blurb that was directly following The_Animal. Especially this part, “Knowing that CBT is unique to them among developed nations only just reinforces their feelings of exceptionalism” and this part, “America’s position of #1 is becoming more self-ordained than earned among too many.”
Lastly, I agree 100% with AtticusinCanada when he wrote his blurb, “That businessweek article comments section is typical of what I see of many American web discussions. It has disintegrated into the worst of the worst. One can see racism, a total lack of education, a complete ignorance of the rest of the world and who its citizens are, and a back and forth school yard bully mentality. Reading such as that makes renouncing so much easier. They are ugly, crude, uneducated and totally without any empathy except for themselves. I’ve very nearly described a type of pathological narcissism. It’s just pathetic.”
Basically, the whole written exchange over there has since convinced me that, as soon as my wife and I move back to Northern Ontario and settle in, I’m going to make an appointment at the US consulate in Toronto and start my own renunciation process. At this point, I would rather be stateless than endure being associated with those types of horrible people.
“Turn it off!”. Is that what Mitt told his kids when the cried about the dog on the roof?
More smoke and mirrors from the Obama admin:
“He cites the government’s recent move to raise GDP 3% by including items never calculated before and that “no other country on the planet counts.” These include such intangibles costs and royalties from books, magazines iTunes song and movies.
The Financial Times reported this strange maneuver as the “U.S. Economy’s “Hollywood Makeover.”
http://moneymorning.com/ob-article/schiff-washington.php?code=117833
More coverage of the renunciations here. Nothing new, but they do have a comment section:
http://rt.com/usa/americans-refuse-citizenship-tax-317/